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TMI Blog2014 (2) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... the assesment year 2009-10 - The claim of the assessee that it has made considerable progress in subsequent years and it has also offered income in those years requires verification at the end of the assessing officer – the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee. - ITA No. 2822/Mum/2013 - - - Dated:- 19-2-2014 - Shri B. R. Baskaran, AM And Amit Shukla, JM,JJ. For the Appellant : Shri S. C. Tiwari For the Respondent : Shri Ashok Suri, DR ORDER Per B. R. Baskaran,AM: The appeal filed by the assessee is directed against the order dated 7.2.2013 passed by the ld CIT(A)- 33, Mumbai and it relates to the AY 2009-10. 2. The solitary issue urged is whether the Ld CIT(A) was just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,488.00 3,36,82,770.00 Profit 83,30,409.30 -- -- Closing balance 7,95,33,600.00 18,71,75,088.00 22,08,57,858.00 2.1 During the course of assessment proceedings for the AY 2009-10, i.e., the year under considertion, the AO asked the assessee as to why it did not offer any profit for the year ending 31.3.2008 and 31.3.2009. The assessee submitted that there was a slump in the real estate market during that period and the bookings were poor. As a result thereof, it faced huge shortage of working capital. Hence, to continue the project, the assessee availed a loan of Rs.15 crores from a bank named M/s Cosmos Bank Ltd, Vashi Branch. The interest outflow on the above said lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit at Rs.39,40,884/- and assessed the same as income of the assessee. The ld CIT(A) also confirmed the income estimated by the AO. Aggrieved by the order of the ld CIT(A), the assessee has filed this appeal before us. 3. The ld counsel for the assessee submitted that the assessee is a partnership firm and hence it is not mandatory for the asseessee to follow the accounting Standards. Yet the assessee preferred to offer the income under percentage completion method. Accordingly, the assessee estimated the net profit for the AY 2007-08 by applying a profit rate of 11.70% and offered the same for as its income for income tax purposes. The Ld Counsel submitted that, due to slump in the market, the bookings did not took place as expected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e project and hence, the assessee has also offered income for the AY 2010-11 and 2011-12. In support of his submissions, the ld AR invited our attention to the details expenditure incurred by the assessee during the year ending 31.3.2010 and 31.3.2011, which are tabulated as under in the paper book filed by the assessee:- Year Opening WIP Purchase Account Direct Expenses Indirect Expenses 2009-2010 22,08,57,858 3,20,48,179 86,80,110 3,67,62,302 2010-2011 30,57,30,199 9,67,79,039 34,47,599 1,11,60,810 2011-2012 42,73,11,671 12,50,95,091 71,53,978 1,33,43,675 2012-2013 58,41,26,456 7,24, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year ending 31.3.2009, wherein the progress was very negligible. There is no dispute that the assessee is following project completion method and hence the assessee is normally required to estimate the profit for each of the years comprised in the Project Period. However, in our view, the said rule cannot be blindly applied by totally disregarding the gound realities. The Ld Counsel for the assessee submitted that the assessee could have also followed "Project Completion Method" also, since it was not mandatory for the assessee to follow the Accounting standards. 7. It is pertinent to note that the choice of the method of accounting, i.e., either "Project Completion method" or "Percentage Completion method" would not alter the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shortage due to poor booking of flats as a result of slump in the real estate market. The year wise expenditure details, in our view, substantiate the claim of the assessee that it did not make much progress in the assessment year 2009-10. Under these circumstances, it was submitted by the assessee that it did not prefer to offer any income for the assessment year 2009-10, as it was not sure of completion of project at that relevant point of time. The Ld A.R has also submitted that the assessee has made considerable progress in the subsequent years and it has also offered income in assessment years 2010-11 to 2012-13. These submissions, in our view, show that there was a valid reason for not offerring income in assessment year 2009-10. Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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